Citing increasing costs, Sens. Lindsey Graham (R-SC) and John Barrasso (R-WY) have introduced the Medicaid Flexibility for States Act, which would allow states to opt out of the Affordable Care Act’s expansion of the Medicaid program and effectively deny health insurance coverage to the poorest Americans:

“I’m confident that if given the chance a large number of states would opt-out of Obamacare’s forced Medicaid expansion,” said Graham. “In South Carolina, expansion of Medicaid under Obamacare will add an additional $1 billion in state matching funding requirements. When fully implemented nearly 30 percent of South Carolinians will be eligible for Medicaid. States like South Carolina can simply not afford this burden. Our bill takes the issue out of Washington and puts it back in the states. I would hope every Senator, regardless of party, would give the people of their home state a chance to be heard.”

Supporters of reform have always found this position a bit bizarre, since Medicaid expansion — up to 133 percent of the federal poverty line in the ACA — provides states with a lot of extra cash, insures more residents and allows states to reduce their uncompensated care costs. Under the Affordable Care Act, the federal government pick up the entire tab of Medicaid expansion between 2014 and 2017 and will pay for 95 percent of the expansion in 2017, 94 percent in 2018, and 93 percent in 2019. Beginning in 2020, the states will still receive a 90 percent match for the expanded population.

Yes, they’ll have to kick in some of their own funds, but the increases in state spending are small compared to increases in coverage and relative to what states would have spent if reform had not been enacted. In fact, as a recent report from the Robert Wood Johnson Foundation concluded that while state spending will rise by $80 billion on new enrollees, “the federal government will largely offset these costs with an anticipated $66 billion in new federal spending on existing Medicaid enrollees.” Also, state spending on uncompensated care could fall by 12.5–25 percent, “saving the federal government up to $87 billion, while states would collectively save $52 billion.”

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